Saturday, May 30, 2015

Something is wrong with the economy. No kidding, you might reply, but what is the underlying cause? Is it Peak Oil? Or is capitalism just a system that doesn't work and is destined to failure? Are we just stuck with inevitable deterioration in living standards for the majority, or is there at least theoretically something we can do about it? Would political decisions help or are we just doomed to watch the disintegration of civilization as the oil runs out?

Tom O’Brien: “Think if we lived in Syria or Egypt. We might think [about] things slightly differently. I don’t know about yourself KMO, but when I heard about Peak Oil first, I was like ‘Holy Jesus, run for the hills!’ You know, it was a very convincing thing. The global system is so complex and there’s so much momentum in certain areas that this shuddering world-wide collapse is probably not the way things are going to happen. But if we look at the Middle East where the mass of wealth coming from oil was controlled by certain fairly disreputable families and maybe their surplus is coming under threat; not as big a surplus as there had been before.

You know, we’re starting to see- especially those countries that now have gone past peak like Egypt, and I think Syria, that aren’t getting money from their external sales of oil anymore and the economy is under more pressure, and they have dictatorships—you see those economies really falling into chaos – like Syria, total chaos. Now that’s also to do with [the] politics of the region. But that’s essentially the peak oil catastrophe meme – is that all these kind of politics things, they do play out, and they can play out in kind of bad ways.”

“So, I just think that this timescale for these things was – the timescale for this to play out could be eighty years. We might look back after eighty years and if we don’t have renewable energies, [those] don’t fill in the gap, we’ll look back on it and we might never know that it was peak oil but behind that- the pushing force behind this thing might be--there’s a good chance it could be peak oil.”

KMO: “Well, I’ve certainly read a lot of people who attribute the ongoing nature of the financial crisis – the recession that never really seems to end except on Wall Street – they say that this is a result of Peak Oil even through it’s not acknowledged. And I look at other trends like globalization and like automation and factors that lead to technological unemployment, and I can see a stagnant economy just from those things alone, without Peak Oil even being at issue. And it could be, it seems to me, that while conventional crude oil production did peak in back in the middle of the first decade of this century, the total amount of hydrocarbon energy available to us has not peaked, and that peak oil or the effects of peak oil might be something that gets added to our current woes in a few years’ time to really make things uncomfortable for a lot more people that are suffering now.”

Tom O’Brien: “Yeah, I thank there’s undoubtedly been an effect from Peak Oil because oil is – well, it might be cheaper than it was in a long time now – but oil is dear. Oil used to be like, what was it, $20.00 a barrel? And now it’s, you know, take your pick—it was up around $100.00 a barrel for a long time. And it’s a key component to every business in the world. And so that’s going to definitely have an effect on the rate of profit. It’s going to definitely have an effect on people wanting to cut wages. So it’s definitely had an effect. And also hydrocarbons have increased, the production, but also the amount of stuff that they’ve had to do to get their hands on it has also increased. So I don’t know what that interaction will be.”

“I also think that when we look at the poor performing economy that we have, you know, a lot of that is down to choice. A lot of the governments that control their own currencies like the U.S. and the U.K., could, if they wanted to, stimulate their economies. Barack Obama and Gordon Brown at the time, they both did. They stimulated their economy enough that the whole thing didn’t fall apart. But then they stopped their stimulus. And the reason why they stopped their stimulus is that the capitalist class see it as a way now to attack labor and to attack the social welfare net of the working people. So the reason why the economy’s not doing that well is that the capitalist class is saying, ‘we’re going to seize our chance now, so we can attack these things; so we can change the structure of society underneath, where we won’t have to do as much national health care, or we don’t have to give them as much pay or whatever.”

“So they’re willing to take a hit on the size of the economy growing versus putting the class war back in business. And I think that – you have many different factors here, but Peak Oil is definitely a factor. What percentage of that , say, low growth is a factor of peak oil, you know, it could be a half a percent of GDP, it could be a percent, I don’t know the figures. But I do think that class war is the main determinant. So the austerity that’s being done in, say, Britain, which does not need to be done, economically it doesn’t make sense for it to be done, or in America, they’re political decisions. I think that they’re class-based political decisions that are effecting that dynamic, as well as other dynamics like peak oil.”

After writing about and contemplating these issues for some time, I've come to believe that this is correct. I don't think the major cause of our economic woes is oil prices or a lack of energy resources at this time. However, I think that will contribute to our woes in the future, along with scarcity of things like fresh water exacerbated by climate change. But I think that the problems with out system are not simply a shortage of oil.

The reason this is important is that I read a lot of people who see everything through the lens of peak oil. They are convinced that the oil is running out, period, and so it doesn't make any sense to talk about the problems with the economy. The oil is running out, they say, we are collapsing, the middle class is doomed, and the idea that this is caused by political decisions as much as anything else is anathema to them. They don't want to hear any discussion of what we can do to stimulate the economy, reduce unemployment, reduce inequality, or anything like that.

A simple illustration will show why this is closed minded. There are a lot of countries with little to no oil resources where the middle classes are much better off than in the United States. If the middle classes are collapsing because of Peak Oil, then why didn't Japan and Germany gut their middle classes the way we did here? If access to cheap oil is the sole determinant of a country's prosperity, then how do explain things like free education and health care in Germany, or the fact that Japan can build high-speed rail lines and keep up their infrastructure and we cannot? Both those countries look a lot better than here, and we can think of many other examples in Europe, Asia, and even Latin America (Costa Rica for example).

Another strike against this is the fact that booms and busts have occurred frequently throughout the history of capitalism, shutting down the economy and tossing millions out of work. The Great Depression is the classic example, and there was certainly plenty of oil back then, including in the United States. The previous depression was renamed the Long Depression, and there are plenty of other examples. There were ten grinding years of slowdown and slump that defied explanation (one proposed explanation was Hansen's, see below.) In the Great Depression, we wouldn't hit Peak Oil domestically for another forty years, or globally for another eighty.

A third strike against this is that the wealthy are continuing to get ever more wealthy. If the ability of the world economy to grow were truly slowing down, we would expect the wealthy to at least experience some level of downturn; they certainly did in the Depression. Instead their luxury, opulence, arrogance, megalomania and sybaritic excesses just continue to increase without bound in ways that beggar the imagination. How is this possible if the energy is truly running out?

Rather than rare occurrences, it seems failures, panics, crashes, slumps, profiteering, unemployment, underutilization and so forth are the rule rather than the exception under capitalism, regardless of the state of energy. So why are we so convinced that oil is the key? I think Tom O'Brien is more amenable to this view because he studies the works of Marx who describes the inherent problems and contradictions within capitalism, so it's easy to see how the system can break down without any recourse to energy and resource shortages. As I've written before, the task of economists is to use "sci-jacking" to rationalize this madcap system based on gambling and usury.

At the same time, we have passed the peak of conventional petroleum resources. Is it possible that the crash of capitalism has actually protected us from peak oil, somewhat? The phrase you hear in this context is "demand destruction," which means that less oil is being used by consumers and industry because of the slump. But did Peak Oil cause the slump, or are we getting a temporary reprieve from Peak Oil because of it?

Since they are political propagandists at base, economists cannot accept the central importance of energy, nor can they accept Marx's critiques, so they must come up with alternative theories to explain the slowdown in capitalist growth observed throughout the world. This is usually somehow couched in the bland term "market failure."

One idea getting traction is the concept of "secular stagnation." This is a situation where the desire for saving outpaces useful investments due to aging populations, slower workforce growth, lack of new developing countries to invest in and technological slowdown. This idea has been promoted by Larry Summers:

[Alvin Hansen] suggested that the Great Depression might just be the start of a new era of ongoing unemployment and economic stagnation without any natural force towards full employment. This idea was termed the ”secular stagnation” hypothesis. One of the main driving forces of secular stagnation, according to Hansen, was a decline in the population birth rate and an oversupply of savings that was suppressing aggregate demand. Soon after Hansen’s address, the Second World War led to a massive increase in government spending effectively ending any concern of insufficient demand. Moreover, the baby boom following WWII drastically changed the population dynamics in the US, thus effectively erasing the problem of excess savings of an aging population that was of principal importance in his secular stagnation hypothesis.

Recently Hansen’s secular stagnation hypothesis has gained increased attention. One obvious motivation is the Japanese malaise that has by now lasted two decades and has many of the same symptoms as the U.S. Great Depression - namely dwindling population growth, a nominal interest rate at zero, and subpar GDP growth. Another reason for renewed interest is that even if the financial panic of 2008 was contained, growth remains weak in the United States and unemployment high. Most prominently, Lawrence Summers raised the prospect that the crisis of 2008 may have ushered in the beginning of secular stagnation in the United States in much the same way as suggested by Alvin Hansen in 1938. Summers suggests that this episode of low demand may even have started well before 2008 but was masked by the housing bubble before the onset of the crisis of 2008. In Summers’ words, we may have found ourselves in a situation in which the natural rate of interest - the short-term real interest rate consistent with full employment - is permanently negative. And this, according to Summers, has profound implications for the conduct of monetary, fiscal and financial stability policy today.

It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972.

The paper explains this history by a simple proposition. The great inventions of IR #2 were just more important than anything that has happened since. The speed of transportation was increased from that of the 'hoof and sail' to the Boeing 707. The temperature of a room was wildly variable in the 19th century but by now is a uniform 70 degrees year round. The transition from rural to urban in the US could only happen once. Only once could electricity be invented and create rapid transit, machine tools, consumer appliances, and the entire electricity-dependent set of entertainment devices from the radio to the TV to the internet and its multiple spin-offs such as the iPod, iPhone, and iPad.

The loss of the impetus of IR #2 inventions makes a big difference in the future of human wellbeing. Figure 5 shows that if the 1948-72 productivity trend had continued, the level of productivity would have been 69% above what would have occurred if the 1972-96 trend had continued. The actual outcome shown in Figure 5 is that the benefits of actual productivity from the IR #3 internet revolution only closed 9% of the 69% gap created by the end of the IR #2 inventions.

Even if innovation were to continue into the future at the rate of the two decades before 2007, the US faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9% annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative 'exercise in subtraction' suggests that future growth in consumption per capita for the bottom 99% of the income distribution could fall below 0.5% per year for an extended period of decades.

Put another way, people have a desire to save and a desire to invest. In conventional economics, savings=investments. If there are a lot of investments, the interest rate is high, but if no one is wanting to invest, the interest rate is lowered to "entice" people to take out loans to make investments. Even with interest rates at zero, money is not being invested in useful ways.Since the interest rate cannot go below zero, "conventional" monetary policy is useless. To cope with this, economists who subscribe to these views propose government spending to put resources to work and close the investment gap. This is economic "stimulus." Some economists even call for negative interest rates!

Another theory is the "Rise of the Machines" hypothesis. These people point out that as more and more jobs are automated, this will cause slower job growth, and hence have a depressing effect on consumer spending. Robots earn no salary, they do not spend money, they do not need housing, food, education or medical care, etc. As more and more tasks are automated (via algorithms, artificial intelligence, networks, robots, software, DIY kiosks, online storefronts, bots, etc.), people are not earning enough total wages necessary to purchase the output that the economy is able to produce. This leads to a glut, and hence a lack of investment, since goods remain unsold. Additionally, automation causes a "bifurcation" of the economy into high-end technical/managerial jobs, and low-end service/social occupations with nothing in between. This has a depressing effect on salaries, even while the owners of the robots get ever wealthier temporarily due to not having to pay workers to produce.

This view was actually also proposed in the the 1930's by a group calling itself Technocracy Unlimited. The Technocrats have long since been forgotten, but they claimed back then that higher efficiency and technological innovations of the time were putting large numbers people out of work. Farmhands were being replaced by combines, and factory output was so high that fewer workers were needed in the factories. Goods were piling up faster than they could be sold, and food was so abundant that producers could not fetch reasonable prices for them and went under. That is, it was a crisis of abundance, not scarcity.

The Technocrats argued that the capitalist's need to earn a profit led inherently to overproduction and gluts. They proposed production for use, centrally managed by engineers and technicians, rather than putting production in the hands of bankers and financiers, and an economy based on use value instead of speculation (one member of the movement was M. King Hubbert). This view is rejected by most "conventional" economists, who insist that history always shows that technology creates more jobs in the long run, the capacity for an economy to create salaried positions is essentially unlimited, and to insist otherwise is to subscribe to the "lump of labor" fallacy.

A fourth hypothesis, and one favored by many Marxists, stems from extreme inequality. As more and more of society's income flows into the hands of fewer and fewer people, the majority of workers earn less and less. A few rich people cannot spend as much as millions of workers, no matter how opulent their lifestyles. The decline of unions, outsourcing, insourcing, and the addition of billions of workers to the global economy have exerted a downward pressure on wages. A consumer economy requires enough consumers with enough money to buy its products. If consumers are cutting back and living paycheck to paycheck because of declining incomes, the thinking goes, they cannot spend in sufficient amounts to produce investment opportunities for the glut of savings piling up in banks from the fortunes of the wealthy few. This is exacerbated by a shocking rise in the cost of housing, and in the U.S. of education and health care. Many people have pointed out that today's levels of inequality have reached the exact same levels as those immediately before the Great Depression of the 1930's.

A lot of commentators point to the political doctrine known as Neoliberalism as the core of for this development. Neoliberalism is a set of economic ideas that supposedly concern economic "freedom," but really has to do with shrinking the state, stripping assets from the public sector, and regulatory rollbacks of protections for workers and the environment. It sets up a world without any constraints on the behavior of the wealthy and corporations, and gives an intellectual veneer to what is basically looting by the upper classes. Market "freedom" has led to stock market bubbles, monopolies, price gouging, rank profiteering, and crony capitalism, along with declining living standards and extreme inequality which corrupts the political process and feeds on itself.

As Naomi Klein has written, during economic shocks, these "structural adjustment policies" are imposed on various nations - repayment of unpayable debts no matter the social cost, selling off of public assets to private investors, reduced government employment, raiding pensions and forcing longer working hours and delayed retirement, dropping trade barriers, financialization of the economy, reduction of public services, rollback of environmental and labor regulations, etc. After 2007-2008 these policies were imposed by bankers upon the people of their own countries in addition to developing nations. "Austerity measures" have pushed countries like Greece into outright collapse, and many other countries caused severely restricted economies with entire generations unable to find adequate employment (Britain, Spain, Italy, etc.).

This is what O'Brien refers to as "putting the class war back in business." This has caused a spectacular rise in inequality, poverty and precariousness for citizens all around the globe, while the wealthy and their heirs rake in ever more than they can ever hope to spend. Easy money policies from central banks cause inflation in assets like fine art and real estate, but little of that wealth trickles down to anyone else. Extreme inequality also causes expenditure cascades, raising prices for necessities that ordinary people must pay for like food and shelter.

Thus, we do not need to resort to Peak Oil at all to explain economic slowdown and stagnation. But does that mean that is has played no role?

As O'Brien points out, while we don't need Peak Oil to explain the current economic failure and stagnation, we cannot discount oil because it is so vital to the functioning of the economy. In an earlier interview, KMO asked a guest whether people were making the claim that things like fracking were proving that peak oil was a myth. This is an odd question, since fracking is actually incontrovertible proof that peak oil is real!There is no way we would be fracking if oil from conventional sources were still abundant. The need to use hydraulic fracturing, to build oil pipelines from Alberta's tar sands to the Gulf of Mexico, to drill miles under the ocean and in the melting Arctic, all point out that we are in dire straits when it comes to energy.

But, as KMO points out, we have turned to other sources of hyrdocarbons - coal, natural gas, kerogen, etc. to meet the demand. Sure, the prices may be all over the board, but they were all over the board throughout the entire history of capitalism. As Carbon Democracy pointed out, the problem with oil traditionally is how to keep it scarce enough to fetch a high enough price, yet this did not by itself tank global economies - these were usually called by a stock market crash, panic, or bank run rather than energy prices.

Th major point is, if we just throw up out hands and say, "the oil is running out, so it doesn't make sense to do anything, might as well just get used to the new reality," this attitude is simplistic and does not really benefit anyone except the people profiting from this mess.

Friday, May 29, 2015

A FURTHER LIMITATION imposed by the Roman imperial system stems from this elegant, leisured and highly privileged lifestyle. It rested upon the massively unequal distribution of landed property: as noted earlier, less than 5 per cent of the population owned over 80 per cent, and perhaps substantially more. And at the heart of this inequality was the Roman state itself, in that its laws both defined and protected the ownership rights of the property-owning class... Its land registration systems were the ultimate arbiter of who owned - and hence who did not own - land, and its criminal legislation rigorously defended owners against the hostile attentions of those left out in the economic cold...

A huge amount of Roman law dealt precisely with property: basic ownership, modes of exploiting it (selling, leasing tor longer or shorter terms, simple renting and sharecropping), and its transfer between generations through marriage settlements, inheritance and special bequests. The ferocity of Roman criminal law, likewise, protected ownership: death was the main punishment for theft - certainly, for anything beyond petty pilfering. Again, we can see a resemblance here to later 'genteel societies relied on similarly unequal distributions of landed wealth in an overwhelmingly agricultural economy, when Jane Austen was writing her elegant tales of love, marriage and property transfer, you could be whipped (for theft valued at up to l0p), branded (for theft up to 4s l0p) or hanged (theft over 5 shillings). In eighteenth century London an average of twenty people were hanged each year.

The Roman state had to advance and protect the interests of these landowning classes because they were, in large measure, the same people who participated in its political structures. This didn't mean that there weren't occasional conflicts between the state and individual landowners, or even whole groups of them. Landowning families sometimes lost their estates by confiscation it they ended up on the wrong side of a political dispute, for instance. (This didn't necessarily mean that they were ruined for ever: as in the medieval world, restoring confiscated lands was a favoured way for a subsequent ruler to win a family's loyalty.) Nonetheless, as we have seen, the state relied on the administrative input of its provincial landowning classes at all levels of the governmental machine, and in particular to collect its taxes - the efficient collection of which hung on the willingness of these same landed classes to pay up.

Monday, May 25, 2015

This is extraordinary. Remember all those dire things that were supposed to happen when Peak Oil hit? All the stuff in The Long Emrgency? Cars queuing up for miles to buy petrol, public transportation jacking up rates, cell phones not working, banks closing their doors, planes grounded for lack of fuel, supermarkets stripped bare, scalpers selling gas in jerry-cans, factories shutting down, stations going off the air, people losing their jobs, political disorder, human sacrifice, dogs and cats living together, mass hysteria...

Turns out all of it is happening...In Nigeria:

Nigeria is facing a prolonged fuel-supply crisis that is taking a severe toll on the country's economy, living conditions, and basic services, reports say.

The shortage in Africa's leading oil producer has forced an increasing number of drivers in Lagos to stop using their personal vehicles, but prices for commuters on public transport have more than doubled. Black market vendors have been selling petrol at about $0.70 per litre - almost double the official price. At Lagos domestic airport on Thursday morning, passengers were told all flights were delayed because there was no aviation fuel.

Felix Onuah, a Nigerian journalist, told Al Jazeera from Abuja on Thursday that many companies and businesses have been forced to shut down due to a dearth of supplies."There is a serious crisis. About eighty percent of petrol stations do not have fuel in the country," he said. "It has also caused a lot of hardship because the shortage has caused a sharp rise in transportation costs and other services associated with fuel."

Musa Yusuf, director-general of Lagos Chamber of Commerce and Industry, told AFP news agency that "many companies have shut down because they cannot get diesel to fuel their plants". He also warned that the fuel crisis could take a major toll on employment. "Unless the situation is redressed, companies may be forced to lay off [staff]," Yusuf said.

[...]

Nigeria's severe fuel shortage has started to cause widespread disruption to everyday services, with the telecommunications and banking sectors the latest hit hard by the worsening crisis.

A major Nigerian bank announced on Monday that it would close all branches at 1pm local time, after major mobile phone networks announced over the weekend that a shortage of petroleum products may cause a disruption in services. In a statement, GT Bank said: "The current shortage of petroleum products in the country has limited our ability to supply diesel to all our branches in order to continue normal branch operations. "Due to this, we unavoidably have to close our branches nationwide at 1pm [on Monday]."

"Things are gradually grinding to a halt in many areas of Nigeria at the moment," our correspondent said, noting that there were reports of schools and electricity networks being affected by the fuel shortage.

Some Nigerian airlines have announced drastically cut services and some radio stations have gone off air, because they can not source diesel for their generators.

[...]

Nigerian airlines have grounded flights and radio stations were silenced as a months-long fuel shortage aggravated by striking oil tanker drivers worsened in Africa's biggest oil producer.Radio stations went dead on Saturday night, including Classic FM, The Beat and City FM, hit by frequent power outages and out of diesel fuel for generators.

Chaos reigned at bus stations where vehicles stood idle and at Lagos' Murtala Muhammad International Airport as one flight after another was cancelled."All flights suspended or cancelled. No fuel. Been sitting here since 6am," one customer complained on Twitter.

Vehicles also were grounded. Normally bustling roads in Lagos, a metropolis of 20 million, were half-empty and gas stations were closed on Saturday.

[...]

Nigeria, Africa’s largest economy, is on the verge of total shutdown due to a widespread and worsening scarcity of petroleum products. The scarcity, a result of strikes by fuel marketers and transporters, has intensified in the last two weeks as black market prices across the country have skyrocketed past the government-approved N87 ($0.44) per litre price.

The scarcity has resulted in a number of high profile companies shutting down or curtailing operations as radio stations, telecommunications companies and public services have all been badly affected.

MTN, Nigeria’s biggest telecommunications network with over 50 million subscribers, have warned customers to expect service cuts due to an inability to power base station across the country.

Nigeria produces about two million barrels of crude oil a day but despite its huge reserves, it imports much of its fuel due to a lack of refining capability - a situation blamed on corruption and mismanagement. The government's fuel-subsidy programme has also been found to be rife with corruption, including false claims and overpayments.

In January 2012, the government tried to end the fuel subsidies, causing petrol prices to more than double. It was forced to partially reinstate them after tens of thousands of people took to the streets in violent protests that left more than a dozen dead.

Onuah, the Abuja-based journalist, said oil and gas is normally subsidised by the state, but the government does not have the funds to pay for it anymore."Suppliers claim they have stopped distributing fuel because the outgoing government led by President Goodluck Jonathan still owes them more than $1bn," he told Al Jazeera...

An interesting glimpse into what happens to an economy when fuel runs low - everything is affected. Is it only a matter of time before it happens elsewhere?

Several years back, Stephen Colbert coined the term "truthiness" - assertions of specious facts which were not exactly "true" in some universal, falsifiable sense, but felt true because they reinforced certain prevailing biases of the targeted audience. Wikipedia defines it this way:

Truthiness is a quality characterizing a "truth" that a person making an argument or assertion claims to know intuitively "from the gut" or because it "feels right" without regard to evidence, logic, intellectual examination, or facts.

Now a prominent economist has accused some other economists of "mathiness," which is to say that a lot of math is used to disguise sloppy thinking and unproven assumptions. It is hiding certain assumptions not in evidence behind an impenetrable wall of equations to make yourself look smart and promote your ideas and career. It is also used to advance certain political biases in under the guise of "mathematical proof."

"In choosing to present the theory in less detail, they too may have
responded to the expectations in the new equilibrium: empirical work is
science; theory is entertainment. Presenting a model is like doing a
card trick. Everybody knows that there will be some sleight of hand.
There is no intent to deceive because no one takes it seriously. Perhaps
our norms will soon be like those in professional magic; it will be
impolite, perhaps even an ethical breach, to reveal how someone’s trick
works."

Romer here is not saying that theory should be
entertainment but instead that it has become entertainment. This is the
notion of mathiness. What researchers he cites are doing, Romer argues,
is dressing up an idea they want to convey in mathematics and presenting
that as a logical theoretical insight...Romer’s first thesis is that
mathiness is becoming more pervasive in economics...But there is a
second thesis to Romer and that is that mathiness is a device being used
by academics to further a political agenda rather than purely the
pursuit of science...

Once upon
a time economists made their arguments in long, discursive, often
contradictory books about pin factories and newspaper beauty contests.
Verbally oriented people like me tend to extol those days, but to most
modern economists they were the dark ages.

In the 1940s Paul
Samuelson of the Massachusetts Institute of Technology brought
enlightenment, in the form of elegant mathematical treatments of the
major concepts in economics. Most of these ideas were inherently
mathematical anyway, he argued in the introduction to his “Foundations
of Economic Analysis,” first published in 1947, which meant that trying
to express them in narrative form involved “mental gymnastics of a
peculiarly depraved type.”

Samuelson’s approach gave the
discipline a, well, discipline that it had previously lacked, and
enabled economics to make great leaps in coherence and rigor. It also
made the field incomprehensible to laypeople, but that turned out to be
more a feature than a bug. Economists were seen as possessing unique
scientific knowledge, and came to play increasingly prominent roles in
public life in the U.S. and elsewhere. Samuelson’s economics-professor
nephew even became Treasury secretary.

There are some obvious
limits to this approach. In his entertaining and enlightening new book,
“Misbehaving,” University of Chicago behavioral economist Richard Thaler
documents case after case of “theory-induced blindness” in which
economists ignored interesting and important real-world phenomena
because they didn’t accord with the dominant mathematical models.

I've talked about how in the past, economics was once primarily institutional economics - which looked at the interaction of various social institutions to understand how the economy worked. Economics was also once called political economy - the understanding that there is nothing "natural" about markets and how they are constituted, rather it is based upon political choices; you cannot separate the workings of the economy from political decisions.

That particular approach went out of favor because of a guy named Karl Marx, who wrote extensively about how the politics and institutions of the time based around "capital" (the title of his book) were designed to reward the wealthy and screw over the poor.

What to do? Simple. Treat markets as naturally arising from of humans' inherent desire to to "truck, barter and exchange," and markets as just a reflection of human social instincts, as natural to human society as a troop to baboons, a pride to lions, or a school to fish. People were assumed to be equals making mutually-beneficial rational exchanges in a non-coercive markets headed toward equilibrium. Making certain assumptions (which are never questioned), you can describe the entire world mathematically. You can justify pretty much anything. And, more importantly, you can predict outcomes!

Washed away in this mathematical approach was any notion of political decisions, inequality, class struggle, debt, and history. You no longer needed to explain anything in terms of history, it could just be explained through extremely complicated mathematical equations that outsiders never questioned. Entry into the field became like physics - limited to math geniuses, and an jargon impenetrable to outsiders was adopted. Economists became advisers to governments rather than merely academics.

The biggest change was that once upon a time economists used to describe the economy as it was actually observed (which is what Adam Smith did). Economics was a relatively obscure discipline confined to a few "worldly philosophers." But after the change, economists would now dictate economic management and decision making. Economics went from a relatively obscure discipline to the most popular major in American colleges today. It has indoctrinated the entire society while its inherent biases go unchallenged. Its assumptions have been internalized to such a degree that we can no longer think outside of them. It made it so that there really was no alternative.

Because of math, economists were assumed to have predictive power. Economists told governments what they could, and could not do, and usually what they could not do was anything that would help workers or redistribute income or ownership. They played up this predictive power, which is why the field was so humiliated by the economic breakdown of 2007-2008. Of course, the truth is, economists cannot predict anything.

Economics was transformed into Walrasian economics.

In 1874 and 1877 Walras published Elements of Pure Economics, a work that led him to be considered the father of the general equilibrium theory. The problem that Walras set out to solve was one presented by Cournot, that even though it could be demonstrated that prices would equate supply and demand to clear individual markets, it was unclear that an equilibrium existed for all markets simultaneously.

Walras constructed his basic theory of general equilibrium by beginning with simple equations and then increasing the complexity in the next equations. He began with a two-person bartering system, then moved on to the derivation of downward-sloping consumer demands. Next he moved on to exchanges involving multiple parties, and finally ended with credit and money.

Walras created a system of simultaneous equations in an attempt to solve Cournot's problem "(which supposedly Walras at first thought was complete merely because the number of equations equalled the number of unknowns)"

The crucial step in the argument was Walras' Law which states that any particular market must be in equilibrium, if all other markets in an economy are also in equilibrium. Walras' Law hinges on the mathematical notion that excess market demands (or, inversely, excess market supplies) must sum to zero. This means that, in an economy with n markets, it is sufficient to solve n-1 simultaneous equations for market clearing. Taking one good as the numéraire in terms of which prices are specified, the economy has n-1 prices that can be determined by the equation, so an equilibrium should exist.

This good article - Mathiness is Next to Growthiness, quotes Nicolas Georgescu-Roegen, who was also one of the first economists to apply the concept of entropy to economics:

"According to the temper that has prevailed for some time now in the social sciences, but especially in economics, the contributions that deserve the highest praise are those using a heavy mathematical armamentarium; the heavier and the more esoteric, the more worthy of praise. Protests against this situation have not failed to be made sufficiently often to have deserved attention. What is more, protests of this kind were made not only by "verbal" economists, such as Thorstein Veblen and Frank H. Knight, but also by some who were well familiar with the mathematical tool, for example, Alfred Marshall, Knut Wicksell, and Lord Keynes. Knight lamented that there are many members of the economic profession who are "mathematicians first and economists afterwards." The situation since Knight’s time has become much worse. There are endeavors that now pass for the most desirable kind of economic contributions although they are just plain mathematical exercises, not only without any economic substance but also without mathematical value. Their authors are not something first and something else afterwards; they are neither mathematicians nor economists. How dangerous is the infatuation with pure mathematical symbolism is proved by the fact that voices from the circle of natural scientists have also often denounced it. ...

The fundamental reason why we cannot do without dialectical concepts is that actuality, at least as seen by the human mind, continuously changes qualitatively. …

The most we can expect from an arithmomorphic model is to depict pure growth, or rather pure quantitative variations of qualitatively different but self-identical elements.

Now, you can guess where I stand on this issue. Romer's critique is limited to a few specific theories, not to the profession overall. but I would contend that 'mathiness' is not confined to a few bad apples or ideas, but is the core of the entire pseudoscience of economics.

The entire profession is based on a fraud. Human behavior is inherently unpredictable. Even if you wash away all the fundamental ways in which the economy is constructed (divided between owners and workers), you still cannot predict things Economics has two things at its heart 1) Human behavior, which is inherently unpredictable, and 2.) Stuff, which is described by certain physical laws such as thermodynamics, chemistry, geology, etc. Economics studies money flows and claims that it can tell all it needs to know about society from that.

In an extraordinary article, prominent economist and blogger Noah Smith has come perilously close to admitting that the entire field is a fraud!

Economics has a lot of math. In no other subject except mathematics itself will you see so many proofs and theorems. Some branches of econ, such as game theory, could legitimately be housed in university math departments. But even in fields such as macroeconomics, which ostensibly deal with real-world phenomena, math is central to everything that economists do.

But the way math is used in macroeconomics isn't the same as in the hard sciences. This isn't something that most non-economists realize, so I think I had better explain.

In physics, if you write down an equation, you expect the variables to correspond to real things that you can measure and predict. For example, if you write down an equation for the path of a cannonball, you would expect that equation to let you know how to aim your cannon in order to actually hit something. This close correspondence between math and reality is what allowed us to land spacecraft on the moon. It also allowed engineers to build your computer, your car and most of the things you use.

Some economics is the same way, especially in microeconomics, or the study of individuals' actions -- you can predict which kind of auction will fetch the highest prices, or how many people will ride a train. But macroeconomics, which looks at the broad economy, is different. Most of the equations in the models aren’t supported by evidence.

For example, something called the consumption euler equation is at the core of almost every modern macroeconomic model. It specifies a relationship between consumption growth and interest rates. But when researchers looked at real data on consumption growth and interest rates, they found that the equation gives exactly the wrong predictions! Yet it continues to be used as the core of almost every macro model.

If you read the macro literature, you see that almost every famous, respected paper is chock full of these sort of equations that don’t match reality. This paper predicts that everyone will hold the same amount of cash. This paper predicts that people buy financial assets that only pay off if people are able to change the wage that they ask to receive. These and many other mathematical statements don't remotely correspond to observable reality, nor do they have any evidence in support of them. Yet they are thrown into big multi-equation models, and those models are then judged only on how well they fit the aggregate data (which usually isn't very well).

That whole approach would never fly in engineering. Engineering is something you expect to work. But macroeconomists often treat their models as simply ways, in the words of David Andolfatto, vice president of the Federal Reserve Bank of St. Louis, to “organize our thinking” about the world. In other words, macroeconomists use math to make their thoughts concrete, to persuade others, and to check the internal consistency of their (sometimes preposterous) ideas, but not to actually predict things in the real world.

Back to Romer’s complaint. He singles out Lucas, Prescott and a few others for having tenuous or sloppy links between mathematical elements and the real world. But from what I can see, such tenuous and sloppy links are the rule in macro fields. Romer says that I am “jaded” for saying that, and that it was bad apples like Lucas and Prescott who soured me on macroeconomic theory. Well, he’s right that I’m jaded, and he’s right that it was learning about models by Prescott that I first became jaded. Romer, you got me.

But when I looked beyond those models, to older or newer models, I found what seemed to be only a difference in degree, not in kind. Macroeconomic theory is chock full of mathiness. It’s not just Lucas and Prescott, it’s the whole scientific culture of the field.

And speaking of Noah Smith, he has coined a neologism of his own - "sci-jacking." This means to take some difference of opinion and claim that it is settled because of "science." He defines it this way: "[the] attempt to co-opt a field of scientific inquiry for political purposes."

For a long time I've been annoyed by the practice of political movements trying to co-opt branches of science for their own ends. ...In social science, you have lots of implications for policy, and so you get a lot more political movements trying to hijack branches of social science. Let's call this practice "sci-jacking." (I like this term for a number of reasons.)...Economics, of course, is a prime target for sci-jackers. It deals with money, and money is what most people want out of policy. It is more directly connected to policy than anthropology or even sociology.

And once again, I contend that this describes the entire field of economics! In my response to the article, I argued that economics cannot be sci-jacked because the entire enterprise IS sci-jacking. It is an attempt to to pursue a specific political agenda under the guise of "science." In a comment to the article above, a commenter writes:

As a new economics student with a previous education in philosophy and then engineering, let me inform you that economics is a joke discipline. Your formulas often don't even have a time variable, the models are oversimplified and then assumed to take the place of reality, and your first year textbooks are childishly veiled Libertarian propaganda without even any references given to original papers.

I recently re-listened to Tom O'Brien's interview with Charles Hall, author of "Energy and the Wealth of Nations," and he said something very similar - his students who study energy and ecology with him and then go on take mainstream economics courses inevitably tell him that these courses are nothing more than propaganda based on ridiculous assumptions and fairy tales.

The best description I've yet read of the underlying hidden assumption of economics comes from numers 10 and 11 of Eric Zencey's Theses on Sustainability:

[10] THAT A DISTINCTION can usefully be drawn between wants and needs seems obvious. Mainstream economics, however, refuses to countenance such a distinction. (Marxist economics does, which, from the viewpoint of an ecologically enlightened economics, is one of the few ways in which it is distinguishable from its neoclassical alternative.) The work of Wilfred Pareto was crucial to this refusal. His contribution to economic theory marks a turning point in the evolution (some would say devolution) of nineteenth-century political economy into the highly mathematized discipline of economics as we know it today. Pareto’s novel idea: because satisfactions and pleasures are subjective — because no one among us can say with certainty, “I like ice cream more than you do” — there is no rational way to compare the degree of pleasure that different people will gain by satisfying desires. All we can do is assert that if an economic arrangement satisfies more human wants, it is objectively better than an arrangement that satisfies fewer human wants. This seems commonsensical until we unpack that caveat “all we can do.” An economic arrangement achieves Pareto Optimality if, within it, no one can be made better off (in his own estimation) without making someone else worse off (in her own estimation). Economic science, in its desire to be grounded on rational, objective principles, thus concludes that were we to take a dollar from a billionaire and give it to a starving man to buy food, we can’t know for certain that we have improved the sum total of human satisfaction in the world. For all we know, the billionaire might derive as much pleasure from the expenditure of his billionth dollar as would a starving man spending a dollar on food. All we can do — all! — is promote the growth of income; and if we care about that starving man, we must work to produce two dollars’ worth of goods where before there was only one, so that both the billionaire and the starving man can satisfy their wants.

[11] THUS WAS neoclassical economic theory, putatively value-free and scientific, made structurally dependent on a commitment to infinite economic growth, a value-laden, unscientific, demonstrably unsustainable commitment if ever there was one.

Léon Walras provides an amoral definition of economic utility...In Walras's theory of value, value is thus totally independent of the common meaning of value or utility. Production or increase of "value", in fact monetary amounts as for instance measured in profit or GNP, is independent of notions like a just or fair society or a better world. This is a fundament [sic] of modern "neoliberalism" or neoclassical economics.

Those biases, along with other ones like productivism, materialism, hedonism, and many others, are all hidden beneath the surface and buried in the math in economics' pretension to be a "pure" science. If that isn't sci-jacking, I don't know what is. As the above commenter says, it is "thinly disguised libertarian propaganda," and note that includes the entire field of economics, not just the ostensibly "libertarian "variety (which is even more ridiculous). Private ownership is superior; competition is efficient; a small state is best; markets when left alone head towards
equilibrium as long as there is no "distortion" from government (i.e. protecting workers or the environment), and there should be no restrictions
on accumulation by the wealthy whose wealth will inevitably "trickle-down" to the masses. There can be no gluts; monopolies are impossible; supply produces it's own demand; exchanges are always voluntary, as are work contracts; people are rational utility maximizers, employment is always unlimited. Income is determined entirely by one's marginal productivity. The planet is infinite; natural resources are provided free of charge; goods are infinitely substitutable; energy and debt are irrelevant, waste is ignored; externalities are exceptions, the list is almost endless.

Hopefully, these criticisms mean that the economics that justifies our current arrangements is starting to crack and fall away, and we will finally be able to start thinking outside the current system for better alternatives. It is very much analogous to when the absolute authority of the Catholic Church began to be questioned which led to all sorts of revolutions in human thought and social organization.

Saturday, May 23, 2015

Friday, May 22, 2015

There's been a flurry of stories and videos about automation over the past few months, more than I can keep up with. Some of that is prompted by the release of Martin Ford's new book adding to the growing drumbeat that yes, automation is slowing job growth, and no, the amount of paid work is not infinite. In fact, sometimes I wish I were on Twitter because I came up with a tweetable that I think sums up the situation perfectly:"There are plenty of jobs; there are not enough paychecks."

There will be lots of technical argument about the methodology and the algorithms used in the Oxford study, but there’s little doubt that the main thrust of the research is accurate: lots of non-routine, cognitive, white-collar as well as blue-collar jobs are going to be eliminated in the next two decades and we need to be planning for that contingency now.

We won’t, of course, for two reasons. The first is that our politicians pay no attention to anything with a time-horizon longer than the five-year electoral cycle. The second is our innate inability to handle nonlinear change. “We’ve always been able to absorb mechanisation and automation in the past” will be the response to the challenge of the technology. “Automation has always created more jobs than it destroyed.” And so on.

All of which was true in the past, when innovation was incremental and society had time to absorb and respond to the shock of the new. Combinatorial innovation is a different kettle of fish, because it feeds on itself and grows exponentially. Given that we’re bound to lose this race against the machine, isn’t it time we began thinking of how we might harness it to improve the quality of our lives, rather than merely enrich the corporations that own it?

Monday, May 18, 2015

A while back I mentioned the fact that one of my coworkers was ill with cancer. She died last week Friday, about a month shy of her sixtieth birthday. She told me once that she put away the maximum amount possible in her 401K. Unfortunately, she will never see it. It makes one question the entire “be miserable until retirement and then start living when you’re 60,” mindset we’re supposed to have under capitalism. Sometimes 60 never comes.

But at least she was not miserable. She genuinely loved her job. She told me she looked forward every day to coming into work. This wasn’t bullshit either; this was genuine. Every day, even with cancer she was there desk at 6:00 AM in the morning. She worked continually through the day, never an idle moment. She worked at the same firm for 25 years. And unlike a lot of the other ultra-boring people here, at least she was interested in a variety of things, from medieval history to travel to geography (it was nice occasionally to have an intelligent conversation once and a while.)

What strikes me is that she was genuinely happier battling terminal cancer than I am in my normal state. Often times she had to cheer me up. It’s pretty awkward complaining about how much you hate your life when the person sitting next to you is literally dying.

Her story was typical of her generation. She grew up on Milwaukee’s South Side and went to our South Division High School where she as the only female in mechanical drafting class. She was reluctantly convinced by some mentors to pursue a career in architecture, which she did, eventually being grandfathered in and allowed to sit for the exam mid-career and without a degree.

But really, in the end, the profession sort of left her behind. The office became much more corporate and she did not have the pedigree that today's corporations are after. AutoCAD replaced her hand drafting and lettering (which I’m told was exquisite). She struggled a bit with Revit and BIM, which we now use for production. But she hung on through it all, through all the changes in the profession, even as she stagnated in the corporate hierarchy and was left unappreciated except for her dedication and personality. Yet despite this, she was still able to supervise contract document work on large hospitals around the country.

She grew up in a much less cruel time. It was a time when “ordinary” people could have a real career in a place like Milwaukee without family money and connections.

Not any more. Such a person could never become an architect today. Today, such people are being displaced by the footloose upper-class who move around the country (and even around the world) to occupy the slim top tier of professional/technical jobs. Our summer interns this year are all full-time graduate students from Clemson University in South Carolina. Clemson is not cheap:

Founded in 1889, Clemson University consists of Six colleges: Agriculture, Forestry and Life Sciences; Architecture, Arts and Humanities; Business and Behavioral Sciences; Engineering and Science; Health and Human Development, and Education. As of 2014, Clemson University enrolled a total of 17,260 undergraduate students for the fall semester and 4,597 graduate students and the student/faculty ratio is 16:1.The cost of in-state tuition is about $13,054 and out-of-state tuition is $30,488.US News and World Report ranks Clemson University 20th among all national public universities. (Wikipedia)

The intern who sits in my area is from Rochester, Minnesota, so the latter figure is the accurate one. I can’t even imagine being able to afford that even if I could not work, not that they would admit me in any case. Here is another biography another newly hired intern (name omitted of course):

XXX is a M.Arch and M.LA dual degree student at Washington University in St. Louis expected to graduate in the winter of 2015. He earned his bachelor degree in Material Physics before studying architecture. His professional training in aesthetics and engineering have been honed through several internships. At PTW Architects Shanghai office, he applied his knowledge in physics and successfully developed a building facade system that could produce a cloud of vapor to help the cooling of the building. At Gensler’s Chicago Office, he worked with various clients ranging from motor centers, national franchise supermarkets to national banks. Last summer XXX worked for Adrian Smith + Gordon Gill Architecture, where he focused on the EXPO 2017 project (DD and pre-CD). While in school he manages the 3D Printing Lab, supervising students in 3D modeling and providing 3D printing technical support. He is a proficient user of Revit, has construction documentation and LEED project experience.

And it seems the “ordinary” salt-of the earth local I have worked with over the years are slowly being displaced with the shiny new globalized hyperachieving models. And this is happening across the board in every profession. Average is over, apparently. The old timers I worked with by-and-large were always the most knowledgeable and the most down-to-earth. Usually they had no degree and came from humble origins, like my co-worker. Times have changed. Whenever I go to one of these funerals, it feels like I am witnessing
the slow dying off the white working class. They are not reproducing themselves. Their kids are struggling. As much as I hate to say
it, I see an utter cluelessness on the part of the lower classes
themselves about this fact. The look of their eyes is that of the cows
in the feedlot – happily chewing their cud totally oblivious to the
fate in store for them and their children. Call it the burden of knowing. I feel bad for them.

Chris Ryan recently talked a little bit in his past two episodes about his decision to not have children. Given that such a mode of life is essentially nonexistent here in the Midwest, I was interested to hear his reasons. I might reflect on my own reasons besides the practical (i.e. as a male I don’t have the equipment).

I could clearly see even from a young age that the lower classes were being liquidated. I could also clearly see that entry to the middle class has been totally shut down. Everything I have seen since has convinced me that this trend is not changing but accelerating (as I’ve written about over the years). That’s the “new” economy and the “new” America. You’re either in the upper class or you’re done for. And my family was definitely not in the upper class. Everyone else will have little to look forward to besides demeaning jobs, patching together enough gigs to survive another day, pinching pennies, debt serfdom, uncertain retirement, etc. Not much of a life, in other words. Since I don’t like cubicle life, and that is the only life there will be in the future, why would I even think about creating new life even if I had the chance? Nonexistence seems preferable to being a wage-slave.

The one saving grace to my family being a complete and utter horror show is the lack of any desire to propagate it into the future. In fact, my only desire is to bring this family to a well-deserved conclusion. I myself should never have been born, but I was, and I’m here, and that’s OK. There’s nothing I can do about that besides self-termination, and I’m going to die anyway, as are we all. But I see no reason to continue that forward, and feel no obligation to do so given the miserable circumstances and lack of opportunity I grew up in. I don’t see anything “noble” in life for its own sake. I always believed in my heart of hearts that my parents should never
have had me. Not because there is anything particularly bad about me,
but because my parents were simply not the kind of people who had the
circumstances and emotional maturity to do so. I never had much of a
chance, really.

I also realized I was profoundly ordinary. I’m not particularly good at anything, I’m not a genius, I’m not particularly attractive, I wasn’t the head of my class, I wasn’t a super-athlete, I’m not a musician, I’m a middling artist at best. I’m not a doctor, a physicist, an engineer, a math-whiz or anything like that. There is nothing special about me, and in an age where average is over, it’s helpful to realize that being average, you have nothing to offer the brave new world we’re building. Since I haven’t really enjoyed my life at all to this point, I certainly don’t want to pass along that “gift.” I see it as more of a burden. I wish my parents had offered me the same courtesy. I think there can be no more selfish act than having children and not thinking about what kind of future those children will have. Yet sadly we see it all the time.

I also don’t tell anyone else what to do, nor to I begrudge anyone else's situation. My circumstances are unique. In fact, sometimes I wish that more people who had their shit together would have children, rather than the most fucked-up people imaginable. People tend to bring another soul into the world with no more concern than buying rims for their car, or bringing home puppies.

I’ve had a lot of difficulties in my life, and a lot of misery, and I would never want to subject another living being to what I have gone through. Now on the other side of forty, things are better now, and I’ve figured out a lot of things, but that doesn’t erase the pain of all those years, and the realization of how messed up and antithetical to human happiness and well-being our society is. So many people I see going through life on auto-pilot following the script, operating on instinct and social cues – now the job, now the degree, now the house, now the wife, now the kids, now the minivan. And I look around and think that it doesn’t look so appealing to me. Just another repeat of the same.

I wish I could understand the motivation. I wish I could join the party, be a happy cubicle worker, bright and bushy-tailed at my desk at 7:30 AM commuting in from white-picket fence-ville, anesthetizing myself in a fog of reality TV and spectator sports. It seems so much easier.

Tomorrow is my annual employee review with the suburban Midwest ultra-breadwinners.(with their “dad bods,” lol) I don’t even know what to say anymore. Now, even people like me with insufficient degrees are being forced out of the profession. It’s clear that I have no future at this firm or in the profession in general anymore. I’m sick of what I do. Should I say that? It’s clear that you need to have a certain type of personality to make in corporate America (and the Midwest “culture”on top of it). I call them "homo corpratus." The rest of us are just wasting our time. They actually wrote “Where does Chad see himself in five years?” on my review. Where indeed? Unemployed? In debt (again)? Homeless? Deceased? It just keeps getting harder and harder to give a fuck.

Life is short indeed. Some people just aren’t cut out for the way the world is now. The least we can do is recognize it and not propagate the suffering. RIP Audrey, you belong in this world a lot more than I do.

Saturday, May 16, 2015

Marie lives a New York middle-class life spending less than $5,000 a year. Kalish, who travels more, needs $10,000. They work, eat, have a home, but there’s no rent bill or grocery shopping. No regular salary, even. Money isn’t their currency.

Marie is a petite, black-haired French woman who looks just like the conventional fortysomething Brooklynite. But she has no job, no visa, and lives in a three-story house for free. Living in the US also comes with an additional bit of daring: she’s an illegal immigrant. For privacy reasons, she asked to be identified with her first name only.

Eight years ago Marie arrived in the US, where she decided to remain. She has been staying for five years with her friend Greg, a real estate agent. They met in upstate New York in 2010 at a permaculture internship in which Marie spent a month learning how to farm sustainably. She needed a place to stay, he had a vacant room, so she became his home keeper, cleaning, gardening and bringing dumpster-dived food in lieu of rent.

In May 2007, Marie landed at JFK airport with a Lonely Planet in her backpack. It was her first time in the US; emerging from the subway at 125th Street and Lenox Avenue in Harlem made her think of Starsky and Hutch, the 1970s television show. She paid rent in cash in Harlem, working as a waiter for three years, before moving to Greg’s.

Going with the flow, Marie has now decided to go back to France. In June she will book a plane ticket and ask to be deported.

“I’m aware that being French, and not Latino for example, makes things easier,” she said. Since she will leave prior to deportation, the main consequence of her overstay will be a ban from re-entering the US for 10 years.

“It’s a one-way trip anyway,” she shrugged. “I’ll pay what it costs.”

The price of the ticket may be more than she has spent in the past several months combined: a few hundred dollars. She receives rent from a house she owns in France, but that’s money she never uses. She lives on cash from baby- and dog-sitting. The $1,000 she recently was paid for painting a house “can go a long way”. Her clothes are finds and she travels by bike, even from Crown Heights to Manhattan.

Imagine going grocery shopping, walking out of the store with five grocery bags, and letting one spill all over the parking lot as you leave. It sounds shocking, and yet that’s what many of us do without even realizing it. North American households waste 15-20% of all the food they buy, which is even worse than the waste produced by restaurants.

An excellent new documentary called “Just Eat It” delves into the largely unknown, yet ubiquitous, world of wasted food. A couple from Vancouver, British Columbia, embarks on a six-month challenge – to survive exclusively on discarded food, which could be anything expired or already wasted.

Jenny Rustemeyer and Grant Baldwin started out with low hopes, imagining that they’d be scrambling for food scraps, but they soon realized, with mixed delight and horror, that there is far more perfectly good food out there than they could ever possibly eat. In six months, they brought home more than $20,000 worth of discarded food and only spend $200.

The food came from places such as Dumpsters, culled bins at grocery stores, farmers’ markets, and food styling photo shoots. Boxes of chocolate bars, dozens of eggs, granola, yogurt, bags of frozen chicken and bacon, salad mixes, and cartons of juice are just a few examples of the perfectly edible items that ended up in their kitchen, often for unknown reasons. Once Grant found an entire Dumpster filled with containers of hummus that still had three weeks left on the best before date. He’ll never know why they were thrown out.

“Just Eat It” challenges our cultural obsession with abundance, of always having more than we need because we can have it. We live in a wealthy society that doesn’t have to eat leftovers, so we don’t; we pitch them instead. In fact, rich countries such as Canada and the United States have anywhere from 150 to 200% of the food that we actually need, according to food waste activist Tristram Stuart.

Friday, May 15, 2015

Buildings always reflect the society in which they are built. The pyramids of Egypt symbolized many things at once – Egypt’s obsession with the afterlife, a massive population boom of idle workers made possible through grain agriculture, the power of the Egyptian state. It was the new top-down social structure made manifest in stone. Roman Civic buildings such as basilicas and amphitheaters symbolized the power, order, and authority of the Empire – effective civil service and bread-and-circus distractions for a restive populace. The tallest buildings in European cities were the Gothic Cathedrals which symbolized the power of the Catholic Church in the Age of Faith. The Crystal Palace and the Eiffel Tower symbolized the age of engineering and iron industrialism.

Recently, the new world order that is emerging from the rotting corpse of post-war popular democracy – which I have termed Neofeudalism, -- has developed similar distinctive architectural forms.

Its form is new and yet familiar. Some of you may be familiar with the tall slender towers that dotted Italian hill towns in the fourteenth century. These were built to show off the wealth and power of patrician families, and to serve as refuges for elites in times of strife.

Now ironically, the form is being reborn in stone and concrete, but massively higher and for the same reason - to cater to the wealth and power of elites, this time the global economic oligarchy who are quickly sopping up all of humanity's collective wealth.

The form is due to the zoning laws of New York City and the height to maximize the economic returns. The towers are being built as places for the global elite to store their cash. They take advantage of complex engineering to create tall, slender towers that rise from their base to their peak, looming over the little people with their eerily ubiquitous presence. Due to their purpose as Elysiums for the one percent, they have been nicknamed Pikettyscrapers, after French economist Thomas Piketty, author of Capital in the Twenty-First Century. Lloyd Alter:

In an earlier post I complained that It's time to dump the tired argument that density and height are green and sustainable. The point was that there are essentially no density limits in Manhattan, but that doesn't mean people are getting affordable housing. Or as I noted in a more recent post, The problems in our big cities aren't caused by restrictions on density and height, but by inequality.

What New York and other cities are getting instead are what are now called pencil towers, or skinnyscrapers, or superslenders: expensive inefficient buildings where the very wealthy buy whole floors which they often don't even use very much, or pay much taxes on...That is what we are seeing in New York and London's skylines: Pikettyscrapers, inequality made solid in marble and glass. Put them all together and instead of a skyline you have a Piketty line....super-slenders are hugely expensive to build, requiring the same stairs, elevators and emergency systems as buildings with floor plates ten times the size. The ratio of expensive exterior cladding to floor area is insanely high. On a use per capita basis, they are horrible energy hogs. As for benefits to the city, the tax income to the City will be minimal because the occupants probably won’t live there full time and won’t pay the New York City income tax...The Skyscraper dictionary notes:

Piketty Line as a skyline typology takes its meaning from Piketty’s argument that unless capitalism is reformed, the very democratic order will be threatened, which resembles the protesting essence of the term picket line, which is a boundary established by protesting workers on strike. It was coined for this dictionary.

...in 1961 [New York City] revised the zoning laws again, making the wedding-cake towers period pieces. Instead, entranced by Mies van der Rohe’s Seagram Building on Park Avenue, a masterpiece of bronze metal set back in a handsome plaza, officials switched to a zoning code that encourages standalone towers. In exchange for ceding open space to the public, developers could build straight up (the permissible height was governed by a calculation called “floor area ratio”, or FAR)...But the 110-storey Twin Towers, anchoring their own downtown skyline and set in a giant plaza (called a “superblock”), were a special case. Otherwise, buildings of 40-60 storeys were the norm.

No one, it seems, was anticipating the current wave of pencil-thin, supertall towers. The technology they depend on has been around for decades — “mass dampers”, which prevent thin towers from swaying uncomfortably, are nothing new. So has the structural know-how that allows them to rise safely even from tiny bases. One of the buildings, 432 Park Avenue, has recently topped out at 1,396 feet, from a site of just 90 feet square.

The real generator of form now is the winner-take-all economy — and with it, the demand for sky-high condos at sky-high prices. Virtually all of the new buildings are condominiums with just one unit to a floor, which means they can get by with very few elevators. And that, in turns, mean they can be built even on very narrow lots. In other words, the demand for $20m to $100m condos, with views in all directions and no next-door neighbours, has given rise to a new building type – making the revised skyline the physical manifestation of New York’s income disparities.

Amazingly, none of the towers required city permission (although they did require clearance from the Federal Aviation Administration, given Manhattan’s proximity to three airports). The city doesn’t limit height, just floor area ratio, and developers, can buy “air rights” from adjacent buildings, letting them go supertall “as of right”. The developer of the Nordstrom Tower, named for the department store at its base, bought air rights from the neighbouring Art Students League, paying the venerable school (which had no plans to enlarge its handsome, 1892 building) some $30m.

Not only are these new towers casting long shadows on Central Park; they are turning the New York skyline, for most of the 20th century a kind of ziggurat with the Empire State Building as its peak, into a jumble. As for life below? The buildings are making the city less pleasant for anyone who cannot afford one of the condos in the sky. Think of it as the new Upstairs, Downstairs, but on an urban scale.

Of course, I'm fascinated by what buildings reveal about our society. See this excellent article from the New York Review of Books: Conspicuous Construction. It goes into greater depth about the reasons for these designs:

The 1990s witnessed the high-tech, telecommunications, and dot-com booms, the rise of hedge funds, the denationalization of the former Soviet Union’s natural resources, and the ascendance of China’s state-controlled capitalism. Together all these developments radically altered standards of private wealth worldwide. In the top bracket there were said to be only fifty or so extremely desirable apartment houses in Manhattan, symptomatic of the oddly persistent scarcity of premium housing in America’s financial hub. Here was a gaping hole at the high end of the market begging to be filled.

Although major fortunes have increasingly trumped religious, racial, or social biases, some co-ops require purchasers to have liquid assets equal to many multiples of an apartment’s price, which has limited sales in them to an even smaller portion of the so-called top one percent. If you buy a co-op, you buy shares in the building; if you want to leave, it is up to you to sell the shares to someone who can pass the board. Conversely, if a condominium board turns down a sale it must buy back the apartment, an effective deterrent to rejection. Thus the offspring of deposed African dictators are as welcome at condos as Social Register scions, and this ease of access has attracted shady characters who’d never get board approval at the toniest old guard citadels...

The nascent Manhattan high-rise that has everyone talking is 432 Park Avenue, the skinny eighty-nine-story spire that soars above the northwest corner of East 56th Street and Park on the former site of the Drake Hotel. Set for completion this spring, it was designed by the Uruguayan-born, New York–based architect Rafael Viñoly. Now the highest residential structure in the Western Hemisphere at 1,397 feet, 432 Park is officially New York City’s second-tallest building (after David Childs’s inevitably symbolic if architecturally negligible One World Trade Center of 2005–2014). Actually, it’s the loftiest by twenty-eight feet in habitable space, since a broadcasting mast accounts for the uppermost 408 feet of the Childs tower.

Many observers report being bemused, not to say unnerved, by the Viñoly building’s strange ubiquitousness. Visible throughout all five boroughs and as far away as Long Island and New Jersey, it startles both visitors and natives with its thin looming omnipresence and seems to follow you around like a bad conscience. One doesn’t hear much about 432 Park’s design for the good reason that artistic niceties are almost beside the point in the mathematical conjuring that brought it and its peers into being. You could even say this structure resembles a three-dimensional balance sheet more than a fully articulated architectural façade.

While [Robert A.M.] Stern clings to a passé postmodernism in much of his work, Viñoly hews closely to the reductive aesthetic of high modernism. The basically white exterior of 432 Park Avenue imparts a graphic feel accentuated by the flatness of the building’s four identical sides, as well as the bold contrast between its dark glass windows (six large square panes per story) and white concrete panels that frame the minimalist fenestration. But what most sets this oddly disturbing composition apart is the way it shoots straight upward to its full, vertiginous height.

Together with the building’s relatively small footprint—ninety-three feet square (about one quarter the length of a football field)—this uninterrupted ascent approximates the proportions of a medieval defensive tower in an Italian hill town. The configuration was made possible by city regulations that waive upper-story “wedding cake” setback requirements—instituted in 1916 to prevent overbuilt Lower Manhattan streets from turning into lightless, airless canyons—but only if a building occupies no more than one quarter of its lot. Now that prices for Manhattan residences in prime locations have gone through the roof, it hardly seems wasteful to leave 75 percent of a plot empty on a $1 billion speculation like 432 Park.

Among this new breed of towers, design elements not directly tied to profit are often downgraded or eliminated as overall costs climb. For example, Portzamparc poetically predicted that the rippling glass exterior he initially planned for One57 would evoke a cascading waterfall. As executed, however, the flat surface of the building’s variously blue, gray, and silver panes fades into a pixelated blur even from a short distance. With today’s mathematically generated super-spires, it’s best to paraphrase Mae West: “Architecture has nothing to do with it.”

Meanwhile, speaking of inequality on the other coast, they instead prefer high-tech human biodome/terrariums to skyscrapers designed by the Galactic Empire. I finally managed to read that Bloomberg article about the Google Campus. Here are some passages that leaped out at me::

Employees will have access to exercise equipment and yoga studios on majestic balconies overlooking central courtyards, although the renderings curiously omit railings and other safety barriers. Perhaps gravity will be different under the glass as well? With cafes and stores on the ground floor, and 5,000 units of proposed housing within an easy recumbent bicycle ride, there may be no reason for workers to ever leave.

Silicon Valley is blessed with nearly idyllic year-round weather, but it’s almost devoid of landmarks, other than a mission-style bell tower on the campus of Stanford University and the utilitarian sign of a once famous electronics company, Ampex, standing along the 101 freeway in Redwood City. Generic low-rise buildings inside endless office parks are spread over the rest of the area, which is carved up by highways and dotted with parking lots, marring a landscape once rich with orchards. The leaders of high tech, it seems, were too busy changing our world to pay attention to theirs.

The Apple spaceship, scheduled to open next year, is meticulously conceived and obsessively polished down to the smallest detail, just like an Apple product. Forty-foot concave glass panes for the curved walls were specially manufactured in Germany. With a projected price tag of $5 billion, it will probably be the most expensive building in history. It will also be closed to the public.

Ingels and Heatherwick may not have the standing of Gehry or Foster, but they’ve been the subjects of exhibitions at major museums and profiles in magazines. They’re both charismatic pitchmen, adept at presenting their visions in relatable terms. Ingels’s 2009 TED Talk, 3 Warp-Speed Architecture Tales, has been viewed more than 1.9 million times. Heatherwick’s newer presentation, Building the Seed Cathedral, about his porcupine-like British pavilion at the 2010 Shanghai Expo, has 1.4 million views….Ingels talks in the lofty argot of a starchitect. Meeting in the lobby of a boutique hotel in San Francisco, he wears all black, with fashionable beard scruff and an Audemars Piguet watch on his wrist. He says things like, “I like showing there is potential for meaning in the mediocrity of the everyday. There is poetry in the practical.”

Google’s request contained some broad guidelines, many from Page himself. He wanted flexible large-span structures that dissolved the conventions of boxy buildings with four vertical walls and a roof. The new Googleplex should meld the inside and outside, bringing nature closer to employees and encouraging creativity and collaboration....Ingels’s unusual perspective also prepared him to interpret Page’s unorthodox parameters—facilitating greater collaboration, fusing the inside and outside, and leaving plenty of options to change the space around later. Ingels’s proposed solution, conceived with Heatherwick, starts with the giant canopies, which evoke the geodesic domes of Buckminster Fuller and the tentlike structures of German architect Frei Otto at the 1972 Olympic Games in Munich.

Ingels says that because the canopies will shield the buildings from wind, sunlight, and inclement weather, the designers can use lighter materials and take greater risks. “By making the membrane sophisticated, we can have a much more free and flexible architecture within,” he says, adding that BIG and Heatherwick are still working on ways to regulate sun exposure and reduce glare. “I doubt that any of us would have arrived at these designs if we had just been doing it alone.”

The true skeptics, really, are other designers, and they’re not hard to find. Why, for example, do you need giant glass enclosures in a place where the weather’s always perfect? “This is why hiring architects from Northern Europe maybe wasn’t the smartest thing,” says Louise Mozingo, a professor of environmental planning and urban design at the University of California at Berkeley. She also wonders how Google plans to clean the glass canopies when it doesn’t rain for long stretches. “There is something about this whole microclimate that they are not quite getting,” she says. [and who is going to scoop up all the dead birds on the outside of the canopy? Is there an app for that? --CH]

Others doubt the practicality of the supposedly flexible design. How, they want to know, do you configure a stable electrical system in a set of modular office units that will be hoisted and moved around by crabots? “Flexibility can become really expensive,” says David Meckel, director for research and planning at the California College of the Arts. Radcliffe says the company hasn’t worked out every problem just yet. “There may be a few things we need to scratch our heads on and figure out over time,” he says. He agrees the project should probably be considered another Google moon shot—a hugely ambitious idea that doesn’t yet have a lot of supporting details nailed down. “It redefines the way we think about the relationship between the built environment and the work that happens there, and the community and ecology it sits in,” he says.

He adds that others probably shouldn’t try to copy the grand design. “This is absolutely the right thing to do for Google. I’m not sure it’s the right thing for anybody else.”

...Instead, it set aside the majority of the developable office space in question for a more modest project proposed by another local tech company: LinkedIn. The move will give LinkedIn a chance to build its own new headquarters as part of a mixed-use development that will also include a movie theater, fitness club, shops, and restaurants, all open to the public. And it will leave Google with rights to less than one-fourth of the commercial square footage it had hoped to build—about enough for one of the four main buildings it had planned...LinkedIn’s plans required no special exceptions to the city’s height or density limits and were touted as more shovel-ready than Google’s far-out designs.

If you want a taste of the architect sales-pitch speak that got them the job, both of the above architects have TED talks (appropriate, no?). I'm sure you'll enjoy their "buildings" from the ski-slope power plant to the giant furry cube made from fiber optics:

Someone needs to write a book, "How Architecture Got Weird." The important thing is that your betters like it. So now rather than just being snookered by fast talkers into goofy fashions, austere apartments and blank canvasses in their art collection, the one percent will now be able to remake the entire built world that we all inhabit as abstract pieces of modernist sculpture according to their whims. Progress!

And speaking of Bjarke Ingels, what is the only form that could be even more evocative of extremes of wealth inequality than giant sculptural phallic towers? Yes, of course, the pyramids! And what do you think old Bjarke is building for the wealthy in New York City (without irony, apparently)?

So it shall be written...so it shall be done!

On yet another biting cold day, Ingels cheerfully locks his foldable bicycle to a street sign in Chelsea and slides into a diner banquette to discuss his New York debut. Having naughtily dropped a few public hints about the project before his client, Durst Fetner Residential, was quite ready for the attention, he is now simultaneously excited and cagey. The new building, he explains, will fuse two apparently incompatible types: a European-style, low-rise apartment block encircling a courtyard, and a Manhattan tower-on-a-podium, yielding something that looks like neither and behaves like both. New York is ready to embrace such a griffin, he insists: “This is the country that invented surf and turf! To put a lobster on a steak—any French chef would tell you that’s a crime.”

Ingels, who has been a visiting professor at Rice University, Harvard, and Columbia, is an unabashed Americanophile. “Europeans like to declare the U.S. dead, but it’s a convenient fiction,” he says. “So many European architects have been influenced by America, and I’m interested to discover that part of Danish culture.” So he has become a part-time New Yorker; he’s rented an apartment in Tribeca, opened an office in Chelsea, and bought a vintage Porsche for jaunts out of town...

The original 'reinvention' of architecture for the 1%. History repeats.

How did Ingels get so BIG so fast? Simple, he came out of the star-making factory at Rem Koolhaas OMA. If you're not familiar with Koolhaas work, see below for a sample:

Click for larger size

So it kind of makes sense now, doesn't it? OMA is the launching pad for hot new European starchitects, and just about all the purveyors of giant sculpture pieces came through it at some point. OMA (Office of Metropolitan Architecture) is not to be confused with the band called OMC, who sang the song that goes through my head whenever I see a lot of modern architecture these days:

The loss of the old Pennsylvania Station, designed by McKim, Mead and White was a tragedy that actually became the start of the architectural preservation movement in North America. Now Richard Cameron and James Grimes of Atelier & Co. want to rebuild it from the original plans. According to Clem Labine in Traditional Building:

The Rebuild Penn Station plan has three major elements: (1) Reconstruct the grand spaces of the original Penn Station; (2) Create a modern transit hub that connects two subway lines, two commuter railroads, and Amtrak; (3) Redevelop the area in and around Penn Station to create a world-class urban destination – like Rockefeller Center. McKim had envisioned his splendid rail terminal as the centerpiece of a spectacular City Beautiful project – but he died before his full dream could be realized. “The time is right,” Cameron declares, “to complete McKim’s glorious urban vision.”

They project that it would be a whole lot cheaper and easier than doing a new modern building, because "architectural design development costs would be dramatically less than for a “blank slate” Modernist exercise in abstract geometry that is the current fashion." They note also that there is no fancy new engineering to be done, given that it's all been done before. And, the foundations are still there.

They don't say where you get the trades who still know how to do the stonework and the detail, but this is where it could get interesting; since all the original drawings still exist, they could be digitized and a lot of the detailed and complex traditional components could probably be 3D printed, using the newest of technologies to recreate the old.

At their national convention May 14-16, AIA members will be voting on a resolution to adopt a position statement in support of a new investigation into the collapse of “Building 7” on September 11, 2001.